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1603 Renewable Energy

1603 Renewable Energy

alliantNational’s seasoned team of tax professionals and former IRS officials, with extensive experience in renewable energy transactions and audits, is uniquely qualified to assist energy project developers with all matters related to the ITC and PTC, including recovery of reduced 1603 grant awards. With the momentous victory for the renewable energy sector in Alta Wind V Owner Lessor v. United States, we can help you recover any portion of your 1603 grant awards that were improperly withheld by Treasury.

Our 1603 grant related services include:

  • Providing a complete assessment of your transaction
  • Determining likelihood of success
  • Representation before the Treasury
  • Advising on tax implications of future/current projects
  • Advising on tax consequences in the EPC and development stages
  • Full audit defense representation

With experience in defending 1603 renewable energy companies during IRS audits, our tax professionals are available to assist you if subject to IRS scrutiny. alliantNational’s experience and competence in assisting taxpayers with tax controversies is unmatched. Our team of former IRS officials will work with individuals at all levels of the IRS to ensure taxpayer favorable outcomes.

Our team of tax litigators are assisted by in-house licensed engineers who have devoted their careers to developing renewable energy systems and technology. These engineers offer valuable insight on project dynamics and equip our attorneys with the tools they need to successfully prevail during litigation or an IRS examination. In addition, our engineers assist our attorneys by:

  • Helping to determine and justify the true basis of 1603 property
  • Serving as expert witnesses during litigation

American Recovery and Reinvestment Tax Act

Section 1603 of the American Recovery and Reinvestment Tax Act was a program that was created to promote the advancement and investment of clean energy in the United States. Section 1603 reimburses eligible applicants for some of the costs associated with installing “specified energy property” which includes:

  • Wind
  • Solar
  • Hydropower
  • Geothermal
  • Biomass
  • Fuel Cells
  • Microturbines
  • Combined Heat and Power
  • Municipal Solid Waste
  • Landfill Gas

Eligible applicants are owners or lessees of the specified energy properties that are not a federal state, or local government or agency. Applicants also cannot be a foreign entity or pass-thru entity. The reimbursements are cash grants distributed by the U.S. Treasury Department’s “Payments for Specified Energy Projects in Lieu of Tax Credits.” As long as the energy system is installed and in service, an applicant could apply for payments from the Treasury Department. The amount of the grant is a percentage of the basis for the property installed. This percentage is between 10 and 30 percent depending on the type of property.

As of 2016, the program has funded 104,733 projects equaling a total funding value of $24.9 billion according to the Treasury Department.

The IRS and 1603

The IRS does have special requirements for 1603 applicants. First, applicants are not eligible to claim certain other energy tax credits based on the installed property. Specifically an applicant cannot claim a credit base under section 45 or section 48 of the Internal Revenue Code.

There are also special reporting requirements. Applicants must provide an annual project performance report for the five years after the property was placed in service. The first report must come within 21 days after the property comes into service. The project performance report must include:

  • Name of applicant
  • Current owner of property
  • Treasury application owner
  • Name of project
  • Location of project
  • Number of jobs retained
  • Annual production in kilowatt hours, MMBTUs or horsepower
  • Installed nameplate capacity

The applicant must also certify that the property continues to qualify and that the property has not been transferred to a disqualified person. Disposing of the property to a disqualified person could mean that the 1603 funds must be repaid to the Treasury Department. In fact if the applicant is ever unable to materially comply, that applicant must repay the Treasury.

Applicants are also responsible for maintaining records that include project, financial, and accounting records. They must also make these records available to the Treasury or any agents of the Treasury.

We’ll Get You Compliant

If you or your client wants to protect their CIC, the time to become compliant is now.

alliantNational’s team of experts helps with:

  • Risk Pool and UTP Review
  • FIN 48 Analyses
  • Review and Preparation of Concern Areas
  • Review and Analysis of Foreign Bank Report Filings
  • Substantiation and Documentation Assistance
  • Substantiation and Documentation Assistance
  • Compliance Review

We’ll Be Your Defense

Already under audit? alliantNational will help you or your client avoid consequences from the IRS, including understatement and negligence penalties, as well as the potential unwinding of the captive formation and subsequent loss of benefits.

The time to act is now, and alliantNational can help defend your interests with:

  • Audit Defense
  • Substantiation and Documentation Assistance
  • Risk Assessment of Your Captive

Have Questions? Let’s Talk.

Take advantage of a free consultation to see how our team of experts can help.

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